Posted on: 27 May 2020
When you are preparing to buy a home, there can be months of preparation to save for a down payment, clean up and improve your credit, and shop for an affordable home. However, there are some ways you can save on upfront costs and in the home's overall price.
Look For Equity Building Opportunities
When you look at the various costs of buying a home, one of the largest expenses is in the actual purchase of the home. Homes are several hundred thousand dollars to start with, so when you look at the overall cost of the purchase, any amount you can save on its price tag will help you save over the life of the loan.
As you begin to shop for a home, look for a home that is priced lower than those similar and in the same area. This discounted home may be due to the seller needing to sell right away due to personal or financial issues. When you purchase this type of home, you may need to have extra patience and time to wait for the home sale to finally close due to the mortgage bank being involved. Or the home might be neglected physically and need a great deal of work to get it up to its potential condition. In either situation, you can buy a home at a discount and build on the equity after you purchase it.
You can find physically and financially distressed properties all over the real estate market, including on real estate listing websites, bank-owned properties listings, and through connections with a local real estate agent. If you want to bid on an auctioned foreclosure home or buy a short sale home, let your realtor know, and they can help you look for this type of property.
Negotiate Closing Costs
Another large cost when you buy a home comes in the form of closing costs, which you need to plan to pay for at the escrow settlement and document signing meeting. These closing costs are a compilation of all the expenses, fees, prepaid and prorated homeownership costs, and commissions for different parties of the transaction. The closing costs will pay for the underwriter's fee, the mortgage broker fee, any loan discount points, prepaid interest and homeowners insurance, the cost of the home inspection and appraisal, and the fee to deliver important documents and record the home's purchase and transfer of title to your name.
Although expensive, these closing costs are essential. However, you can negotiate for the seller to pay for a good chunk or all of your closing costs at the closing meeting. Many times the seller will pay for their portion of the closing costs out of the home's sales proceeds, so by agreeing to pay yours as well, they can ensure the home sells and they can release their responsibility for any existing mortgage they have.
For more information, reach out to a real estate agent.Share